Green Energy and Tie-Dyed T-Shirts

Some people still see renewable energy as a little kooky, which may be why Ohio's governor wants to be sure that people understand his interest in green energy is based on hard headed economics. The AP reports that Ted Strickland left his hippie garb at home when he brought up energy at the meeting of the National Governors Association:

In Ohio, facing a budget shortfall of at least $733 million by June 2009, Democratic Gov. Ted Strickland has proposed a stimulus package that includes spending $250 million on alternative energy sources such as solar, wind and clean coal.
"If states like Ohio want to overcome their economic challenges, they've got to embrace advanced energy technologies and renewable sources," Strickland said Thursday. "This idea of clean, green energy is no longer a tie-dyed T-shirt kind of idea. This is mainstream economics."

When I talk with people about the economics of wind power in Delaware, I often draw a graph with two lines: the price of wind power and the price of energy from fossil fuels. Today, the price of electricity from fossil fuels is slightly lower than electricity from wind power. These two lines will cross, possibly before the proposed wind farm becomes operational in five years. Indeed, as I reported last week, the price Delmarva Power is paying for energy from conventional sources is going up.
Here's where conventional wisdom gets turned on its head. We are so used to hearing that renewable energy is more expensive that even wind power advocates almost overlooked the assumptions behind the so called green premium. The projection that the Bluewater Wind project would cost residential customers an average of $6.46 a month is based on assumptions that natural gas prices will go down, and stay down for years to come.
It doesn't take a brilliant flash of insight, a radical paradigm shift, or a tie-dyed T-shirt to understand how wind power is going to be less expensive, not more expensive, over the next thirty years.